Bill 28 (British Columbia)

Bill 28, the Miscellaneous Statutes (Housing Priority Initiatives) Amendment Act, 2016, came into force on August 2, 2016. The law was introduced after calls urging the British Columbia provincial government to intervene in the housing market and curb foreign investment that was seen as a major contributor to the rapid rise in home prices.

The Act has four parts:

Vacancy tax: Amendments to the Vancouver Charter to enable the City of Vancouver to impose a municipal vacancy tax on vacant residential property
Foreign-buyers tax: Amendments to the Property Transfer Tax Act, imposing an additional property transfer tax of 15% on all residential property purchased by foreign buyers
Amendments to the Real Estate Services Act discontinuing industry self-regulation of the real estate industry
Creating a new Housing Priority Initiatives special account to fund initiatives in respect to housing, rental, access, and support programs with the new tax revenues resulting from this law.^[1]

History

Vancouver locals have been complaining for a long time about foreigners purchasing homes and displacing residents who find housing has become unaffordable, and end up being homeless. There was also a concern expressed that housing purchased by foreigners stays vacant. So, on Aug 2, the British Columbia government introduced Bill 28.^[2]

The Act was introduced as a surprise move by the Liberal provincial government. It was announced and went through a first reading on July 25, 2016 without advance notice. It went through second reading a day later, and a final reading by July 29, 2016. It became law on August 2, 2016. The amendments relating to the Property Transfer Tax Act became effective August 2, 2016, while the other legislative amendments will come into effect on the date of royal assent or by regulation of the Lieutenant Governor in Council. ^[3]

Vacancy tax

The charter was amended to enable the City of Vancouver to impose a municipal vacancy tax on vacant residential property.

The number of homes sitting vacant in Vancouver is perceived as a problem. A city report pegged the number at 10,800 vacant homes and condos in Vancouver. The thought is that if properties are rented instead of sitting vacant, housing affordability would improve. A proposal by Vancouver's mayor, Gregor Robertson , to tax vacant homes required a change to Vancouver's charter.Robertson is hoping to increase the number of available rental units by encouraging homeowners to put vacant homes up for rent.^[4]

Foreign-buyers tax

A new 15% tax is added to the Property Transfer Tax when a purchaser, who is not a Canadian citizen or permanent resident, purchases residential real estate property in Metro Vancouver. The tax is expected to add a large cost to foreign buyers of homes in Vancouver and increase tax revenue for the provincial government.

Government figures showed that foreigners, mainly Chinese, have purchased $1 billion worth of real estate in British Columbia during a five week period in 2016. When the tax was introduced, Christy Clark the Premier of British Columbia said: "There is evidence now that suggests that very wealthy foreign buyers have raised the price, the overall price of housing for people in British Columbia". Foreign buyers were blamed by Tom Davidoff of the University of British Columbia (UBC) for large increases in real estate prices experienced in Vanvouver. According to David Ley, also of of UBC, taxing foreigners has slowed down rapid real estate appreciation in other countries.^[5]

Real Estate Services Act

The Real Estate Services Act was amended to end self-regulation of the real estate industry in British Columbia.^[6]

Housing Priority Initiatives special account

The Housing Priority Initiatives special account was created to hold the new tax revenues created by this law to fund initiatives in respect of homes rentals, access, and support programs. On September 14, 2016 The Province reported that the housing affordability plan will launch with almost half a billion dollars from windfall real estate taxes. The fund will be used to increase housing supply in the Lower Mainland^[7]

On 16 September 2016, Michael de Jong, Minister of Finance for British Columbia announced that the government will spend $500 million on housing affordability, while also canceling the planned increase in MSP premiums and possibly increase Welfare rates.^[8]

References

This article is issued from Wikipedia - version of the 12/3/2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.